Semi-Retirement Made Earlier and Easier

OCBC 360 Account: A Heavy-Hearted Update

For what is effectively a liquid savings deposit, the OCBC 360 Account offered a ridiculously high interest of 3.05% for balances up to $50,000 during its introduction last year.

Therefore, during the past year, I had been one of the biggest proponents of the OCBC 360 Account. In fact, in April 2014, I wrote a comprehensive blog post advocating how AMAZING the product was and unexpectedly, the post went a little viral. So much so that someone actually emailed me to check if it was ok for OCBC to feature my site URL on their website as a referral link (although it never materialised in the end…oh well).

Just as well, since there won’t be any attachment from me to this product and no reluctance on my part to tone down my strong endorsement of this OCBC 360 Account. With the recently announced changes that apply from 1 May 2015, the promotional offer has truly ended. Let’s take a closer and fairer look at the changes before you conclude that I am just a bitter influencer. *cough cough*

====================

The Past Promotion

When the OCBC 360 Account was introduced, critics mentioned that the product wasn’t that fantastic since conditions were attached to it. I thought that was pretty unfair. If no strings were attached, OCBC and other banks might as well have closed down their fixed deposit department.

What made this product ridiculously AMAZING was how easy it was for a household to qualify for those conditions. Yeah, the hoops were not difficult to jump through EVERY month. 0.05% interest was given to all balances and each condition fulfilled (below) enabled one to qualify for an additional 1% of bonus interest.

The first two were really no-brainers. If you were employed, you just needed to inform your HR personnel about your account change. Perhaps buying her a drink and sharing this good deal with her would make the additional workload a little easier to swallow.

And seriously, 3 bills isn’t hard if you are running a household like what I do. But in case you aren’t, fret not. Just sign up for 3 credit cards and spend 10 bucks on each of them to qualify for a freaking additional 1% on $50,000 which equates to $500 for the year. Yes, your $360 of expenditure is literally entirely paid for by the bank.

With our frivolous expenses in the restaurants of Singapore and us charging the household’s mobile and broadband bills to the OCBC 365 Credit Card, we have also never failed to meet the 3rd condition during any of the months last year.

*Apparently, there’s also another 1% paid on monthly incremental balances but that’s really too insignificant to merit a detailed discussion.

Largely because of Condition 4, OCBC had the cheek to announce that OCBC 360 Account Just Got Better. That really got me shaking my head at their audacity.

Yes, theoretically, if one can fulfil all four conditions, he/she can achieve 3.2% of bonus interest on an increased limit of $60,000. But Hoop 4 is such a difficult and high hoop for one to jump through. With the high sales charges and commissions associated with those investment products, it simply does not make sense to do it just to qualify for an additional 1% of interest.

Seriously, if you’re playing a game, would you invest in $1,000 on a jetpack just to jump through a high hoop that pays you $100?

Therefore, although the limit has increased to $60,000, the effective interest for the bulk of account holders has dropped to 2.2%.

The New 15HWW OCBC 360 Strategy

From the glass is half full angle, we are quite glad to have enjoyed most of the ridiculously high interests for the past year. But the strategy is going to change quite drastically on this front.

Some readers who are more CSI-oriented (through my comments on this site and other blogs) have probably found out that Mrs 15HWW has left her job and is currently into the first month of her sabbatical. (Yeah, it’s spreading and more on that in another post.) So no 1.2% for her account from this month on.

Coupled with the halved bonus interests on Conditions 2 and 3, it just doesn’t make sense for both of us to maintain two separate OCBC 360 accounts anymore. In the next few weeks, both of us will probably go down together to OCBC to close her account and amend some instructions to ensure that my account can easily earn 2.2% of bonus interest.

2.2% is still very much possible as we have to hit $600 of expenses for the OCBC 365 Credit Card to qualify for the cash rebates. Therefore, the stricter criteria for Condition 3 has no material impact on us.

If this change had happened half a year before, my heart would probably have been even heavier when writing this post. But with new bond offerings in the market (I will get down to writing them soon, do stay tuned.), there will soon be equivalent or higher-yielding instruments for us to park our cash in.

====================

Instead of being heads and shoulders above its competitors, the OCBC 360 Account is now just marginally better than let’s say, the more complicated UOB One Account. In a way, that’s also saying that it’s probably still the best SGD deposit product and although it’s no longer AMAZING, it’s still good.

But DEFINITELY NOT BETTER than its original form.

Addendum:

1. OCBC has again changed its terms and conditions and its bonus interest structure on April 2017. Please refer to this new post for a new evaluation on this product.

2. We are ditching the OCBC 360 and moving onto another bank account. Please refer to this latest post for the reasons why.

13 thoughts on “OCBC 360 Account: A Heavy-Hearted Update”

I feel your pain. I was once suckered into a product that started off awesome, but the rules of the game kept changing. Tougher criteria to fulfill, increasing minimum balance, etc. Needless to say, I closed the account. Nowadays, I’m pretty skeptical of the longevity of such products.

Same goes for credit cards – I no longer hunt for the best card anymore. I use a 1.2% card that works for everything with no requirements and no restrictions. Not the best card, but I like the flexibility!

Nice meeting you at the MAS gathering and good to see you around at this blog!

Honestly, I don’t expect any longevity for these products. From the StanChart XSaver account, Manhattan credit card to the OCBC 360 Account and 365 credit card, it’s all about maximising what they have to offer there and then. There’s no loyalty involved and once they change terms, it’s time to check if there’s something better out there.

I think the bank was willing to pay such high interest rate in the past year with easily satisfied strings because it wanted to collect information on how and where we use our money and how much we earn, ie input for its data analysis. Given people don’t change much in spending habits and the bank had gathered the data for some time, I think it had fulfilled its objective and decided to go for other objectives like cross selling its investment/insurance as well as getting savers to park more money with it.

I am not in a good position to advise as I do not know much about the fund. Moreover, you need to know your own investment objectives for subscribing to the fund. Do you want to be invested in equities, and through a fund?

For me, OCBC 360 is just a savings account that gives me a good interest (up to 2.2%). In your case, minimally, you need to check whether the benefits (additional 1% for OCBC 360 ) outweighs some elements of the cost (sales charges and monthly fees) if you choose to invest in the fund.

Thanks for the very clear explanation on how the 360 works! I think u did it better than the officer whom I just spoke to. She kept asking me to take out an endowment plan when she found out my funds status with the bank and I thought it best to chew on it 1st than decide on the spot.